Bursting the CETA water scare balloon

Peter Clark is one of Canada’s leading international trade strategists. His clients, in Canada and around the world, include governments, corporations and trade associations. He is a frequent media commentator and columnist for iPolitics.ca.

There is another round of negotiations in Ottawa this week. It may not be referred to as a Round because the previous one was supposed to be the last. But the meetings involve negotiations. And, I expect that there will be at least two more weeklong sessions before Ministers are presented with the final impasses to resolve.

CETA is facing much more serious problems in the possible discrimination against oilsands-based products – and a serious lack of E.U. flexibility on rules of origin. Even if the fear-mongering rumours about foreign ownership of water services were true, it is a tempest in a teapot.

No Canadian trade negotiation would be complete without scare mongering from civil society groups.

The usual suspects – the Council of Canadians and TradeJustice.ca, are raising the alarms. Water is an important focus for the Council. They spent a lot of time and effort trying to save Canadians from ourselves.

This time the battle is being fought at the municipal level. Several bogeymen have been raised: procurement, “buy local food” campaigns and now water services.

Civil Society has always been concerned that negotiations are conducted in private between governments. Whether this is private or secret does not matter. There is a natural suspicion that government lackeys of corporate Canada are selling the rest of us down the river. Or is it that they are selling the lakes and rivers?

CETA is not about diverting Canada’s lakes and rivers – which would not do Europeans much good in any event because we have no common borders. Drinking water in consumer and bulk packages is in Chapter 22 of the Harmonized Customs Tariff. It is included in NAFTA in Canada’s WTO schedule and it will be included in CETA. There is two way trade in bottled water. There does not appear to be any sound or compelling reason for Canada to want to exclude San Pellegrino, Evian and Eska from CETA.

Secrecy creates a situation where each and every leak must be embraced and manipulated to extract as much fears and foreboding as possible. The leaked texts, while rather old, do not suggest cause for alarm. When I tweeted my impressions, CETAWatch, an arm of the Council of Canadians, politely directed me to the TradeJustice.ca and four schedules claimed to be linked to the October 2011 negotiating sessions. These annexes detail federal and provincial exclusions from the CETA.

The leaked annexes contain details of activities and services under federal and provincial jurisdiction on which certain applications of CETA have been reserved? Each province, for example, has made reservations with respect to liquor boards and electricity delivery services. Why? – Presumably because they are delivered by provincial utilities. The smoking gun which raised the alarm bells? Water services and wastewater services are not among the reservations or exclusions from the unfinished CETA texts.

For the most part, water services are not mentioned – but does this justify the fears and calls to stop the negotiations?

Water services are, however, reserved by the Yukon (YU-19) because the Yukon Water Board delivers water on a territorial basis. Does this signal that provinces should have done the same?

Water supply services in Canada and waste water treatment services are essentially a municipal affair.

While municipalities are not excluded from CETA, there are valid reasons for including them, for example preventing avoidance of obligations through responsibility shifting.

Canadian water systems are alive and, with the occasional exception, well. They are not at any risk of foreign domination or takeover if Canada and the E.U. conclude the CETA.

CETA does not require municipalities to privatize water services or any other services they deliver locally. There is no requirement to privatize services which do not compete with private entities and do not operate on a commercial basis. Canadian municipal water services recover only about half the costs of treating and delivering water. The remainder is covered by taxes. That is not a commercial operation in my view.

Wastewater treatment, too, is a municipal service which is largely tax funded.

The Federal government sets national drinking water standards. Provinces have constitutional responsibility for water, including drinking water, and are responsible for managing use. That means the provinces own the water and regulate its sale, distribution and treatment.

Check your water bill – it comes from the municipal government. Municipalities deliver most of the water provided to Canadians for household and drinking in Canada. Some municipalities have delegated water service to private companies or back to provincial corporations. CETA does not change this. Should a trade agreement contain reservations from every city, township, village and hamlet within its jurisdiction? Municipalities have no responsibilities or authorities under our Constitution. This would be a nightmare.

Nowhere in CETA (or in NAFTA) are municipal authorities required to allow foreign investors to take over their locally-run water services or wastewater treatment services.

Some municipalities have contracted out water services. In these cases there is an investor/state risk if a municipal government privatized its water services by sale or contract to a qualifying foreign investor. The investor would be able to sue for damages in the event of unjustified discrimination or improper and insufficient compensation for expropriation. This is already addressed in NAFTA.

There will be and should be similar investor-state provisions in the CETA to protect Canadian and E.U. investors. There is no logical argument for discrimination or unfair and inequitable treatment of foreign investors.

Trade agreements are complex, and the devil is in the details. Leaked negotiating texts and appendices should not be taken out of context nor interpreted without reading all of the relevant documents.

The water services fear balloon was crying out to be burst. There is no problem. There was no problem. There will be no problem as a result of CETA.